August 18, 2017 | Grain Hedge Insights | Kevin McNew | Views: 563

IL Corn and Soybean Yields May Be in Danger of Falling Short of Forecasts

USDA Announces Two Positive Trade Developments

In the overnight session the grains traded slightly higher with December corn up ¼ cent, November soybeans up ¾ of a cent and December Chicago wheat up 2 cents. December 2017 Corn is now trading at 3.64 ½ cents which is just six cents above the contract low of 3.58 ½. Any push lower should be met with technical support around that contract low that was set August 31st 2016.

 

Illinois corn and soybean yields may be in danger of falling short of forecasts, as significant contributions from the weather are still needed in the eastern half of the state. This year, the US Department of Agriculture does not expect Illinois to set new yield records. Last week, the agency pegged the state's corn and soybean yields at 188 and 58 bushels per acre, respectively.

 

This morning, China’s Agricultural Ministry  confirmed a bird flu outbreak at quail farms in Luodian. The outbreak infected 13,103 quails and culled 8,110 birds. This was the second major bird flu outbreak in China this year with the first occurring at the beginning of the month.  It was also reported this morning that the Philippines found a second outbreak of bird flu 50 miles away from the first reported case reported a week ago. Both cases of the bird flu were found in quails.

 

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On Thursday the USDA announced two positive trade developments. The first is that South Korea lifted a ban on U.S. poultry and eggs and the second was that the U.S and Argentina have agreed to a deal allowing the U.S to import pork into their country. This is the first time since 1992 that U.S. pork has been allowed to enter Argentina and should support the longer term fundamentals of the hog market.  

France reported that 79 percent of their corn crop was rated good-to-excellent which was unchanged week over week. They also showed that their soft wheat harvest is wrapped up with 99 percent harvested up 2 percent from this week before.

 

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August 15, 2017 | Grain Hedge Insights | Kevin McNew | Views: 477

Traders Digesting Yesterdays Crop Progress Report

Grains Trade Lower in the Overnight Session

In the overnight session the grains traded lower with December corn down 4 ¼ cents, November Soybeans down 5 ¼ cents and December Chicago wheat down 5 ½ cents after crop conditions came in better than expected in Monday afternoon’s report. Traders will be digesting yesterday afternoon’s crop conditions report and anticipating the NOPA crush report which will be released out at 11 AM CST today.   

 

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Expectations were for the good to excellent ratings to be steady this week for the Corn and Soybean crop. Corn ratings increased by two percentage points in the good to excellent category to 62 percent. States that saw improvement included South Dakota which was up 5 percent, North Dakota which was up 8 percent, Nebraska marked a 4 percent increase, Indiana was up 3 percent and Illinois was up 4 percent compared to last week. There was a 3 percent drop in Iowa and a 10 percent drop in Michigan good to excellent ratings in corn.   

 

The soybean crop ratings declined by 1 percent in the good to excellent category to 59. Among the states that saw a deterioration in their soybean conditions was Iowa which was down 3 percent, Michigan which was down 7 percent and Illinois which was down 1 percent.

 

Spring Wheat rated good to excellent improved by 1 percent to 33 in this week’s report. This improvement was in line with expectations as crop condition improvements were observed across Idaho, Minnesota, Montana and North Dakota. Despite the slight uptick in crop conditions the spring wheat crop is still well below the good to excellent rating of 66 during the same period last year.   

Spring wheat harvest has advanced to 40 percent complete up from 24 percent the week before. The four year average is 35 percent harvested during the same week last year.  

 

The NOPA crush report which will contain the data of 13 companies that account for approximately 95 percent of US soybean crush will be released out 11 AM CST this morning. In a Reuters poll of analysts the average guess is for the report to show 143.004 million bushels crushed.

 

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August 14, 2017 | Grain Hedge Insights | Kevin McNew | Views: 383

Grains Trade Lower in Sunday Overnight Session

Weekend Rains or Southern Half of N Dakota and Parts of Western Minnesota

In the Sunday overnight session the grains traded lower with December corn down 4 ¼ cents, November soybeans down 9 3/4 cents and December wheat down 7 cents. Weekend rains in the southern half of North Dakota, parts of western Minnesota and eastern Nebraska are pressuring the market along with a positive weather forecast that shows a couple more good chances for precipitation over the next two weeks.  

 

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This morning Saudi Arabia’s state grain buyer announced it had purchased 660,000 metric tons of animal feed barley it had recently tendered. The barley purchase was filled at an average price of $203.37.
 

On Friday, Russia’s agriculture consultancy IKAR increased its forecast for Russian wheat production to 77-80 million metric tons from 74-77 million metric tons in its previous forecast. The large crop anticipated in Russia has put pressure their wheat prices making this the second consecutive week that wheat export prices have fallen. Russia FOB export prices now sit at around $192 a metric ton. Russia continues their wheat harvest and is now only two percent behind last year's harvest pace.

 

On Friday, the latest commitment of traders report showed that managed money net long position in corn fell from 84,644 to 67,073. Wheat also lost ground with the biggest change coming from Chicago wheat which went from net long 12,190 to a net short position of -14,101. Kansas City wheat net long position shrunk from 54,187 to 48,935 and Spring wheat held mostly steady at 10,708 from 10,808 the previous week. The managed money net long position in Soybeans also dropped sharply this week from 39,795 to 12,913.


 

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August 11, 2017 | Grain Hedge Insights | Kevin McNew | Views: 395

Weekly Cash Comments

Weekly Cash Commentary for week ending 08/11/2017

Grain basis was mixed this week with corn showing little upward strength this week while soybeans posted a 2-cent advance.

 

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Cash markets were mostly stable with some corn markets continue to push higher basis levels over the last few weeks of futures selling pressure. Corn ethanol plants as a group were fractionally higher on the week but there was a number of plants raising bids 5 to 10 cents a bushel to draw out more grain from farmer hands. At river terminals, the basis increased on average at 1.4 cents a bushel.

 

The competitive landscape in the corn market saw markets in IL/IN push to new highs helping to increase their drawing area around neighboring competition. Along the MS River, Roquette Grain and Green Plains showed double-digit gains in spot corn basis while Poet in Indiana upped their bids by 4 cents on the week to significantly expand their drawing region.

 

For soybeans, basis levels showed more buoyancy in the face of steeper losses on the Board. Crush facilities were up 2 cents a bushel while the river terminals were up 3 cents on the week.

 

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August 11, 2017 | Grain Hedge Insights | Kevin McNew | Views: 349

Grains Pause Their Sharp Mover Lower in the Overnight Session

Today's Market will Continue to Digest the WASDE Report

In the overnight session the grains seemed to pause their sharp move lower that was triggered after the USDA’s 17/18 corn, soybeans and wheat production estimates topped analyst forecasts in the latest WASDE report. We should also note, better than expected precipitation last night in western Illinois and the latest weather models show the 6-15 day forecast bringing precipitation and much needed relief in the western corn belt.

 

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Today, the market will continue to digest the surprise in yesterday’s reports.

The most bearish part of this report was the new crop production forecasts which showed corn yield forecast at 169.5 BPA and soybean yield at 49.4 BPA compared to an average analyst expectation of 166.2 and 47.5 BPA respectively. These numbers surprised the markets and caused sharp selling pressure immediately following the report's release.  

 

Ending stock forecasts for 17/18 corn were 270 million bushels higher than the average guess among analysts in the Reuters poll. The smaller than expected revision in corn yield and 25 million bushel decline in both exports and feed and residual caused ending stocks to soar to 2.273 billion bushels, well over analyst forecasts.

 

New crop soybean ending stocks were also higher than analysts were expecting despite lowering old crop carry-out and increasing exports by 75 million bushels. Ending stocks were still higher than the July WASDE by 15 million bushels, primarily due to the larger than expected yield revision from 48 BPA to 49.4 BPA.  

 

The WASDE report held the old crop corn balance sheet steady keeping ending stocks at 2.37 billion bushels surprising many analysts that expected to see a revision lower in corn used for ethanol. Old crop soybean ending stocks were revised lower than the average analyst expectations.The revision was a result of reducing crushings by 10 million bushels and increasing exports by 40 million bushels.

 

US wheat ending stocks also surprised traders after yield was revised lower by only .6 BPA leaving new crop stocks at 933 million bushels compared to the 907 million bushels expected.


 

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August 10, 2017 | Grain Hedge Insights | Kevin McNew | Views: 431

USDA WASDE Report Out Today at 11 CST

Grains Were Up in the Overnight Session

In the overnight session December corn up ¼ cent,  November soybeans is up 4 ¾ cents and December wheat is up 1 ¼ cent. Traders have been positioning before the August WASDE report which is scheduled for release at 11 CST.

 

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Brazil’s agricultural statistics agency released its 16/17 corn and soybean forecast which showed a revision higher for both. Brazil’s 16/17 corn crop forecast increased 1.2 MMT to 97.2 while their soybean crop was revised only slightly, up .08 MMT to 114 in the same marketing year.

 

Ethanol production increased by 10 thousand BPD to 1.012 million BPD according to the EIA report on Wednesday. Despite the increase, weekly ethanol production was down nearly 1 percent compared to the same week last year. With July ethanol production numbers in the books, we will need to see roughly a 6 percent increase in ethanol production throughout the remainder of the marketing season to meet the USDA’s corn used for ethanol projection. Although this is possible, it is unlikely and may be reason enough to see the USDA revise their ethanol forecasts lower on the old crop balance sheet in today’s report.

 

Ethanol stocks increased to 21.347 million barrels from 20.852 million barrels last week. Although ethanol stocks have seen a drawdown since March when they peaked for the year, they remain at record highs when comparing on a same week basis.

 

Old crop export sales for both corn and soybeans missed expectations with soybeans actually recording a marketing year low, down 83 percent from the prior four week average. All new crop sales were strong however, with corn and soybeans both beating analyst expectations.  

 

Weekly Export Sales-

 

 

Actual

Estimated

Wheat

464

250-450

Corn - OC

52

100-300

Corn - NC

628

400-600

Soybeans - OC

45

100-300

Soybeans - NC

639

250-450


 

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August 09, 2017 | Grain Hedge Insights | Kevin McNew | Views: 452

Corn Yield Looks to Be Reduced in Tomorrow’s WASDE Report

Grains Trade Higher in the Overnight Session

In the overnight session the grains traded slightly higher with December corn up ½ a cent, November soybeans up 1 ¾ cents and Chicago wheat up 2 ¼ cents. The cool and dry weather forecast across key growing regions continues to fan the uncertainty surrounding this year's crop and anticipation for the USDA WASDE report to be released on Thursday seems to support the market.

 

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Thursday’s WASDE report will be released at 11 AM CST and will include the USDA’s first survey based production forecasts for 2017. In the latest poll by Reuters, the average trade guess is for corn yield to be reduced to 166.2 BPA from 170.7 in the July report. Analysts are expecting corn production to be revised to 13.855 billion bushels, down from 14.255 billion bushels last month.

 

For soybeans, the average analyst guess is looking for yield to be revised lower by .5 BPA to 47.5 BPA and for production to slip from 4.26 billion bushels in July to 4.212 billion bushels.  

 

Analysts polls show wheat production is likely to be revised lower as well with all wheat production expected to fall from 1.76 billion bushels in July to 1.711 billion bushels in August. The largest revisions are expected to be made to the spring wheat crop which has suffered from drought and heat in the western Dakotas into Montana for the majority of the growing season.

The Japanese Ministry of Agriculture sought 120,000 metric tons of feed wheat and 200,000 metric tons of feed barley in a tender this morning. It was also reported that Taiwan’s MFIG rejected all offers in a tender to buy 130,000 metric tons of corn.

 

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August 08, 2017 | Grain Hedge Insights | Kevin McNew | Views: 320

National Soybean Crop Condition Revised Higher This Week

Market Continued Higher in the Overnight Session

The market continued higher in the overnight session with December corn up ¾ cent, November soybeans up 8 cents and wheat up 2 cents. The market will digest the latest updates in the crop conditions report, but most attention will be directed toward the August USDA WASDE report scheduled for release on Thursday.  

 

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The weekly crop progress report showed a continued deterioration in the national corn crop. In the 18 states that make up over 90 percent of our acres, corn rated good-to-excellent slid to 60 percent from 61 percent the previous week. Good-to-excellent ratings declined by 5 percent in Illinois to 58, down 1 percent in Iowa to 64, down 1 percent in Minnesota to 80 and down 1 percent in Nebraska to 59. The decline in good-to-excellent ratings was partially offset by a 3 percent increase in Indiana to 52, a 2 percent increase in Missouri to 63 and a 1 percent increase in North Dakota to 40.   

 

The national soybean crop condition was revised higher this week to 60 from 59 percent last week with some of the largest increases coming from North Carolina, Ohio, North Dakota, South Dakota and Indiana this week. Spring wheat conditions improved by 1 percent this week to 32.

Precipitation is expected in the Southern Plains and Lower Mississippi Valley in both the 1-5 and 6-10 day weather forecast. The Midwest is expected to stay cool, but the mild and dry pattern is expected to cause some moisture stress to the corn and soybean crop.    

 

Figures from from the General Administration of Customs of China showed that soybean volumes imported during July increased by 31.1 percent to 10.08 million metric tons. According to one analyst, the strong increase can be explained by delayed arrivals from the previous month coupled with a change in taxes. Either way, the large supply in the cash market is likely to continue putting pressure on Chinese crush margins which have been in the red since February. Just yesterday it was reported that a Chinese soybean buyer resold more than 500,000 metric tons of soybeans.

 

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August 07, 2017 | Grain Hedge Insights | Kevin McNew | Views: 297

Crop Progress Report due out Later Today

Grains Higher in Overnight Session

In the overnight session the grains are trading higher with Dec Corn up 3 ¾ cents, Nov Soybeans up 8 ¾ cents and Dec Wheat up 3 ¼ cents. The grains are finding some bargain buying at technically supportive levels after a week of strong selling pressure. The 6-10 day weather outlook is favorable for crops with cooler than normal weather and precipitation expected throughout the majority of the central US.

 

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Key support levels have held at least for the time being as traders anticipate the Crop Conditions report. Following the crop conditions report due out later today, traders will turn their focus to the USDA Supply and Demand report released on Thursday where the USDA will including the first data from field surveys.   

 

According to the commitment of traders reports released on Friday for the week ending August 1st, hedge funds cut their corn futures and options positions by 22,171 contracts to 84,644 contracts. Speculative soybean longs were reduced by 11,090 contracts to 39,795.

 

In the wheat complex speculative long positions held by hedge funds and money managers in Chicago Wheat were reduced by 15,660 contracts last week to 12,190. Kansas City Wheat net long positions shrunk by 6,468 to 54,187 and Minneapolis wheat positions were held mostly unchanged at 10,808 compared to 10,705 the previous week.  

 

Over the weekend two major Chinese soybean buyers resold more than 500,000 metric tons of soybeans. There has been some speculation that the resale of soybean cargoes could have been caused from a tightening of credit. The headline will likely cause some concerns that lackluster Chinese crush margins, congestion at the ports and a tightening of credit all may have an impact on future Chinese demand.    


 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)

August 03, 2017 | Grain Hedge Insights | Kevin McNew | Views: 351

Market Traded Lower in the Overnight Session

Midwest Trending Wetter over next 10 Days

The market is trading lower in the overnight session as the weather outlook shows the Midwest trending wetter over the next 10 days with the second half of that forecast favoring showers in the northern Midwest. The forecast also shows a slightly wetter Iowa forecast over the next 10 days. Yesterday, there were some scattered showers that touched North Dakota and North East South Dakota.  

 

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On Wednesday the EIA announced that weekly ethanol output was 1.0 million barrels per day, a decline of 10,000 BPD from the previous week. This is the second time in three weeks that production has fallen below last year's levels. Ethanol stocks also declined, falling 677,000 barrels to 20.85 million barrels. Current ethanol production is running only slightly above last year's levels for the last five weeks which means our current pace is most likely not enough to meet the USDA’s forecast of 5.4 billion bushels of corn used for ethanol. We will keep a close watch on ethanol production in the coming weeks.  

Wheat missed trade expectations in this week's export sales report and was down 71 percent from the previous week. Old crop corn sales were also disappointing, recording a marketing year low and falling 60 percent from last week. New crop corn sales came in on the low side of the trading range. Soybeans met trade expectations for both old and new crop.  

 

Weekly Export Sales-

 

Actual

Estimated

Wheat - NC

145

300-500

Corn - OC

36.7

100-300

Corn - NC

438

400-600

Soybeans - OC

233

100-300

Soybeans - NC

367

250-450

 

 

On Tuesday the Russian agricultural consultancy IKAR said that it increased Russia’s wheat production to 77 million metric tonnes, up from its previous estimate of 74. The consultancy also increased their estimated range of Russian wheat exports by .5 million metric tons.

 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)

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